From Kent Oyler, GLI
The 2015 General Assembly session has ended and a meager handful of legislation has made its way to the Governor’s desk. One bill that flew under the radar was HB76 sponsored by Representative Steve Riggs (D-Louisville). It enables folks in Kentucky to invest small amounts of money in Kentucky based companies in return for a piece of the action. It’s called equity crowdfunding and previously it was only open to the one percenters; those proverbial ‘certified rich guys’ who qualified as accredited investors. With responsible restrictions and protections, HB76 opens the investing game game to everyone in KY.
As the founder of Commonwealth Crowdfunding, which was created to promote equity crowdfunding authorized under the 2010 JOBS Act (since misplaced in the SEC for over 3 years), I was especially pleased to see this legislation passed to allow intrastate equity crowdfunding in Kentucky. Eventually the bureaucrats in DC will issue guidelines that may override state laws, but until that happens, if it ever happens, Kentucky joins a small number of forward thinking states that have enacted their own rules.
The oversight and diligence the legislation offers has been fully formed by the experience of the other 14 states that have already adopted similar bills and in many cases, House Bill 76 provides even stronger safety measures to protect these small investors. It’s worth noting that both Indiana and Tennessee have passed their own version of equity crowdfunding.
Crowdfunding is of vital importance to Kentucky as we continue to look for ways to attract and support the best and brightest entrepreneurs. In many cases, the small investors who will participate in crowdfunding are living in the same towns as the entrepreneurs and have a real interest in participating in the funding of their companies. By “democratizing” this fundraising opportunity, we allow a much broader group to participate in this investment process while companies can now tap into a potentially vast pool of capital.
Small businesses represent the majority of our economic base, accounting for close to 93% of all registered businesses in Kentucky. These businesses employ over 44% of the working population. This legislation, which GLI strongly supported in Frankfort, along with the existing state programs sponsored by the Cabinet for Economic Development, has the potential to position Kentucky as an even more attractive place for the entrepreneurs to start new ventures.
At GLI we work with business owners every day who are facing challenges in the capitalization of their companies. This legislation allows us to offer business owners the chance to seek investors right in their own communities, and shows that our state legislature is indeed capable of passing win-win bills when it so chooses. Thanks for standing above the crowd(fund) Rep. Riggs!